Cal­i­for­nia tax rev­enue is soar­ing

Lodi News-Sentinel - - OPINION - CalMat­ters is a pub­lic-in­ter­est jour­nal­ism venture com­mit­ted to ex­plain­ing how Cal­i­for­nia’s state Capi­tol works and why it mat­ters. For more sto­ries by Dan Walters, go to

How­ever, the re­al­ity is at odds with the pro­pa­ganda.

Cal­i­for­nia state and lo­cal cof­fers are bulging with ad­di­tional rev­enue, thanks largely to a still-vi­brant econ­omy.

Last week, the state Depart­ment of Fi­nance closed the books on 2018-19 rev­enue and re­ported that the state col­lected $144.8 bil­lion, $1 bil­lion more than it had an­tic­i­pated just weeks ear­lier, and $2 bil­lion­plus more than the 2018-19 bud­get had orig­i­nally forecast.

It’s also a whop­ping 71.5% more than the state was col­lect­ing a decade ago, far out­pac­ing both pop­u­la­tion growth and in­fla­tion.

The state has enough money to max out its re­serve funds and pro­vide sev­eral bil­lion dol­lars in ex­tra cash to off­set schools’ ris­ing pen­sion costs.

Per-pupil spend­ing on K-12 schools has risen by at least 50% in re­cent years as they col­lected their con­sti­tu­tion­ally man­dated share of that ris­ing rev­enue and ben­e­fited from ever-ris­ing property-tax rev­enue.

Speak­ing of which, the of­fi­cial line goes some­thing like this: When vot­ers passed Propo­si­tion 13, the his­toric property-tax limit law, in 1978, they ham­mered schools and lo­cal gov­ern­ments un­mer­ci­fully.

Once again, the re­al­ity is at odds with the pro­pa­ganda.

By im­pos­ing a 1% cap on tax­ing real property val­ues (plus voter-ap­proved bonds), rolling back tax­able val­ues to 1976 levels and lim­it­ing fu­ture in­creases to 2% per year, Propo­si­tion 13 did im­me­di­ately and sharply re­duce rev­enue. In fact, the mea­sure cut it from $10.3 bil­lion a year to $5 bil­lion.

Since then, how­ever, property-tax rev­enue has steadily climbed, thanks to that au­to­matic 2% an­nual raise, new con­struc­tion and the re­assess­ment of homes and com­mer­cial prop­er­ties when they change hands.

Cal­i­for­nia’s county tax asses­sors have just closed out their rolls of tax­able property for the 2019-20 fis­cal year, and once again they are sharply higher, led by soar­ing property val­ues in the booming San Fran­cisco Bay Area.

Over­all, tax­able property val­ues are up by more than 6% to about $6.5 tril­lion, which will trans­late into about $75 bil­lion in rev­enue. On av­er­age, property-tax rev­enue has in­creased by more than 7% a year since 1978, and over­all rev­enue has ex­panded 15-fold since then.

So if Cal­i­for­nia’s state and lo­cal gov­ern­ments are en­joy­ing sharp in­creases in rev­enue, why is the po­lit­i­cal es­tab­lish­ment com­plain­ing about an in­come/outgo squeeze that must be re­lieved by tax­ing even more?

The an­swer is found on the outgo side. Lo­cal gov­ern­ments and schools are seeing their pen­sion costs sky­rocket, thanks to some re­ally bad pen­sion-fund man­age­ment over the last cou­ple of decades, while state of­fi­cials are be­set by de­mands from their po­lit­i­cal al­lies for higher spend­ing on a wide va­ri­ety of ed­u­ca­tion and so­cial wel­fare pro­grams.

Po­lit­i­cally, it’s eas­ier to say yes to taxes than to say no to spend­ing.

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